German Sovereign
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A pair of German sub-sovereigns had the primary public sector bond market to themselves this week, with each taking €500m at tight levels to their secondary curves. -
The State of Lower Saxony was the sole borrower active in the primary public sector bond market on Thursday as it raised €500m with a 10 year at a negative yield. The deal ended up comfortably subscribed in spite of a slow start to the book-build.
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The State of Lower Saxony mandated banks on Wednesday to run a 10 year euro benchmark on Thursday, as German states remain the only action in the public sector primary market.
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The State of Brandenburg got over the line with a fully subscribed order book and a yield inside its curve on Tuesday, successfully avoiding the fate that its compatriot Berlin met at the tenor last week.
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The State of Brandenburg will keep the primary euro public sector bond market ticking on Tuesday after mandating banks for a new 20 year bond for which it hopes to achieve a better outcome than Berlin's deal at the tenor last week.
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Erste Abwicklungsanstalt (EAA) is considering a return to the euro market in the fourth quarter to complete its funding programme.
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The European Financial Stability Facility finished its €5bn Q3 funding programme on Wednesday with a €1bn tap of an October 2026 line in an auction. The European Investment Bank was also in the market on Thursday adding to a Climate Awareness Bond.
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Trading levels given are bid-side spreads versus mid-swaps and/or an underlying benchmark and bid-yields from the close of business on Monday, July 27. The source for secondary trading levels is ICE Data Services.
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Investors turned out in force as KfW brought its first benchmark green bond of the year this week. The strong demand allowed the German agency to print its joint biggest ever green bond on the back of its largest ever order book for such a deal along with an attractive pricing advantage over a conventional bond.
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KfW made a strong return to the benchmark green bond market on Tuesday, taking advantage of a more attractive pricing dynamic for green bonds over conventional issuance compared to earlier in the year.
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KfW will lead the charge in the euro public sector bond market on Tuesday with a €3bn green bond that will match its biggest ever deal in the format. Eurofima and the State of Berlin are also preparing to bring bonds to the euro market.
